Theory question 107
Control Accounts7. Inter – Regional Trading Company operates self-balancing ledgers. Extracts for the year ended 31st January, 2000 show the following:
Sales ledger balances – 1/2/99: Dr N2,450; Cr N390
Purchases ledger balances – 1/2/99: Dr N217; Cr N1,847
Credit purchases N15,800
Cash sales N20,000
Credit sales N37,600
Bad debts N188
Provision for doubtful debts N245
Discount received N683
Discount allowed N168
Returns inward N207
Returns outward N175
Cheques from debtors N22,150
Cash from debtors N14,000
Cheques drawn for creditors N15,500
Sales ledger balances – 31/1/2000 Cr. N470
Purchases ledger balances – 31/1/2000 Dr. N240
You are required to prepare: (a) Sales Ledger Control Account (b) Purchases Ledger Control Account.
Show the model answer
(a) Sales ledger control account
Dr: balance b/f 2,450; credit sales 37,600; balance c/d (credit balances) 470 = 40,520.
Cr: balance b/f 390; bad debts 188; discount allowed 168; returns inwards 207; bank 22,150; cash 14,000; balance c/d 3,417 = 40,520.
Cash sales (20,000) and the provision for doubtful debts (245) are not entered.
(b) Purchases ledger control account
Dr: balance b/f 217; discount received 683; returns outwards 175; bank 15,500; balance c/d 1,312 = 17,887.
Cr: balance b/f 1,847; credit purchases 15,800; balance c/d (debit balances) 240 = 17,887.
Only items that pass through the personal ledgers go into control accounts: leave out cash sales and provisions.